While I do find it unusual that a screening interview would be conducted by someone who reports to the position to be filled, I can think of situations where it makes complete sense. For example, if the person already turned down the promotion because they were happy with their current position and did not want everything the next job entailed, the company might value that person's opinion very highly. (On the other hand if it is a cut-throat dog-eat-dog operation that gives points for how many colleagues you trample on the way up the idea really would stink.)

As for the travel issue, of course they will pay for the trip once the candidate gets past the screening interviews. That's what screening interviews are for. In an ideal world the headhunter would only offer candidates worth seeing in person, but even if the recruiter in this case were doing such a superb job that doesn't mean the company has that level of trust with them. And it is not just a matter of travel expense, there is also the time people have to devote to having a candidate on-site that they want to be sure is worth the investment.

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